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THT Heat Transfer Technology, Inc. Announces Third Quarter 2013 Results



   THT Heat Transfer Technology, Inc. Announces Third Quarter 2013 Results

Third quarter 2013 sales revenue totaled US$13.8 million, exceeding guidance

PR Newswire

SIPING, China, Nov. 13, 2013

SIPING, China, Nov. 13, 2013 /PRNewswire/ -- THT Heat Transfer Technology,
Inc. (NASDAQ:THTI, "the Company", or "THT"), a leading provider of heat
exchangers and heat exchange solutions in China's clean technology industry,
today announced its unaudited financial results for the third quarter ended
September 30, 2013.

Third Quarter 2013  Financial Highlights

  o Sales revenue increased by 10.0% year-over-year to US$13.8 million. Sales
    revenue exceeded the Company's previously announced guidance of US$12.0
    million to US$13.5 million for the third quarter 2013.
  o Gross profit decreased by 17.7% year-over-year to US$4.3 million.
  o Gross margin was 31.0%, compared to 41.4% for the third quarter 2012.
  o Operating income decreased by 6.0% year-over-year to US$0.8 million.
  o Net income attributable to common stockholders increased by 38.4%
    year-over-year to US$0.7 million. 
  o Basic and fully diluted net income per share was US$0.03, compared with
    net income per share of US$0.02 for the third quarter 2012. 

Chairman and Chief Executive Officer Guohong Zhao commented, "Our third
quarter sales revenue exceeded guidance despite the continued market
challenges in China. Demand for our plate heat exchangers and heat exchanger
units increased due to ongoing demand from the heating industry. However,
these revenue gains were offset by cost increases in labor and raw materials,
as well as mounting competitive pricing pressure, resulting in a decrease in
gross profit. Nevertheless, as a consequence of our continued efforts to cut
costs and lower expenses, we have realized a 38% year-on-year increase in net
income for the third quarter."

"As we move into the fourth quarter 2013 and fiscal year 2014, we expect
industry and macroeconomic headwinds impacting our business to continue, with
increased competition and production costs putting downward pressure on profit
margins. In light of the continued economic downturn, we intend to focus our
activities in a few key areas, namely sales to the heating industry – where
market demand is still healthy, geographic expansion into Northwest China –
where government development efforts are intense, and investment in overall
research and development. We believe these efforts will position us well for
future growth once market conditions improve."

Third Quarter 2013 Financial Results

Revenue

Sales revenue for the third quarter 2013 was US$13.8 million, a 10.0% increase
from US$12.5 million during the same period in 2012, primarily due to
increased sales revenue from plate heat exchangers, heat exchanger units and
air-cooled heat exchangers. Sales volume of heat exchange products totaled 421
units in the third quarter 2013, a decrease of 283 units from 704 units in the
same period of 2012. Unit price increased this quarter as a result of customer
demand for a greater number of special products with higher input costs.

In terms of revenue breakdown for the third quarter 2013, sales revenue from
plate heat exchangers increased by US$1.1 million, or 25.2%, to US$5.5 million
from US$4.4 million in the same period of 2012. Sales revenue from heat
exchanger units increased by US$0.7 million, or 14.5% year-over-year, to
US$5.2 million from US$4.5 million. Sales revenue from air-cooled heat
exchangers totaled US$0.4 million, an increase of 241.7% as compared with
US$0.1 million in the third quarter 2012. During the third quarter 2013, sales
revenue from shell-and-tube heat exchangers was US$0.6 million, a 74.0%
decrease from US$2.2 million compared to the same period of 2012.

Cost of Sales

Cost of sales for the third quarter 2013 increased 29.6% year-over-year to
US$9.5 million from US$7.3 million in the third quarter 2012. The increase was
mainly attributable to an increase in costs to produce the special products.

Gross Profit and Gross Margin

Gross profit decreased 17.7% to US$4.3 million during the third quarter 2013,
from US$5.2 million in the same period of 2012, mainly due to increased cost
of sales. Gross margin was 31.0% for the third quarter 2013, compared with
41.4% during the year-earlier period, mainly due to an increase in labor costs
and raw material costs associated with the special products.

Operating Expenses

Administrative expenses decreased 43.4% to US$1.3 million in the third quarter
2013, from US$2.4 million for the same period of 2012, primarily due to a
decrease in bad debt expense in the third quarter of 2013.

Research and development expenses increased 76.7% year-over-year to US$0.6
million, from US$0.3 million in the third quarter 2012, mainly due to an
increase in the costs of raw materials used in research and development.

Selling expenses decreased 4.4% to US$1.6 million for the third quarter 2013,
compared with US$1.6 million during the same period of 2012, mainly due to a
slight decrease in travelling expenses incurred by the Company's sales
personnel. 

This resulted in total operating expenses of US$3.5 million in the third
quarter 2013, decreased by 19.9% compared with US$4.3 million during the same
period of 2012.

Income before Income Tax

Income before income tax was US$0.8 million in the third quarter 2013,
compared with US$0.7 million in the same period of 2012.

Income Tax

Income tax decreased 24.5% to US$0.1 million in the third quarter 2013 from
US$0.1 in the same period of 2012, mainly due to decreased prepayment of
income tax in the third quarter of 2013.

Net Income

Net income attributable to common shareholders was US$0.7 million in the third
quarter 2013, a 38.4% increase compared with US$0.5 million in the same period
of 2012.

Basic and fully diluted net income per share was US$0.03 in the third quarter
2013, compared with US$0.02 in the same period of 2012.

Liquidity

As of September 30, 2013, the Company had cash and cash equivalents of US$1.8
million and restricted cash of US$2.0 million. During the first nine months of
2013, there was a net cash outflow of US$8.9 million, compared with a net cash
outflow of US$0.1 million in the same period of 2012.

Net cash used in operating activities was US$4.5 million for the first nine
months of 2013, compared with US$4.3 million for the same period of 2012. Net
cash used in operating activities during the first nine months of 2013
increased compared to the same period in 2012, mainly attributable to a
decrease in accounts receivable by $4.0 million, a decrease in bills
receivable by $2.0 million, a decrease in other receivables, prepayments and
deposits by $1.4 million, an increase in accounts payable by $2.9 million,
offset by decreased income of $1.2 million, payments made to acquire
inventories of $4.7 million, and an increase in other payables and accrued
expenses of $3.3 million.

Net cash used in investing activities was US$0.3 million for the first nine
months of 2013, compared with US$1.1 million for the same period in 2012. The
decrease in net cash used in investing was mainly due to a cash payment of
$0.7 million to acquire land use rights during the nine months ended September
30, 2012, while no such payment was made to acquire land use rights during the
nine months ended September 30, 2013.

Net cash used in financing activities was US$4.3 million for the first nine
months of 2013, compared with net cash provided by financing activities of
US$5.3 million for the same period in 2012. The increase in net cash used in
financing activities was mainly attributable to the increase of net repayment
of short term loans by $9.4 million during the nine months ended September 30,
2013 as compared to the same period in 2012.

Fourth Quarter 2013 Guidance

THT expects to generate sales revenue in the range of US$28.0 million to
US$35.0 million in the fourth quarter 2013, compared with US$27.6 million in
the fourth quarter 2012. This represents the Company's preliminary view, and
is subject to change.

About THT Heat Transfer Technology, Inc.

Through its Chinese operating subsidiaries, THT Heat Transfer Technology, Inc.
designs, manufactures and sells plate heat exchangers, shell-and-tube heat
exchangers, heat exchanger units and other heat exchanger products with total
heat exchange solutions. Heat exchangers play an integral part in
helping customers improve energy efficiency. Used in a number of industries,
THT's products focus on energy conservation, emission reduction and other
environmentally friendly applications. Its six major product categories are
plate heat exchangers, shell-and-tube heat exchangers, air-cooled heat
exchangers, weld plate heat exchangers, heat exchanger units and
plate-and-shell heat exchangers. The Company also offers comprehensive heat
exchange solutions.

THT's in-house R&D capabilities enable it to deliver tailored products that
better meet the changing demands of its customers. The Company has a strong
record of delivering high-quality products and services to leading domestic
and international customers. THT has completed over 3,000 projects and has
provided heat exchange solutions to several Fortune 500 companies. The Company
is headquartered in Siping City, Jilin Province, China. For more information,
please visit the Company's website at www.tht.cn.

Safe Harbor Statement

This press release contains certain statements that may include "forward
looking statements". All statements other than statements of historical fact
included herein are "forward-looking statements". These forward-looking
statements are often identified by the use of forward-looking terminology such
as "believes," "expects" or similar expressions, and involve known and unknown
risks and uncertainties. Although the Company believes that the expectations
reflected in these forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may prove to be
incorrect. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. The
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of factors,
including those discussed in the risk factor sections of the Company's
periodic reports that are filed with the Securities and Exchange Commission
and are available on its website (http://www.sec.gov). All forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these factors. Other than as required
under the securities laws, the Company does not assume a duty to update these
forward-looking statements.

Contact:
The Company:

Mr. Jack Xiao

Investor Relations Manager

THT Heat Transfer Technology, Inc.

Tel:+86 (434) 326 6779

Email: IR@tht.cn
Investor Relations (Beijing):

Xiaoyan Su

Taylor Rafferty

Tel: +86 13718865807

Email: tht@taylor-rafferty.com
Investor Relations (US):

Roland Tomforde

Taylor Rafferty

Tel: +1 (212) 889 4350

Email: tht@taylor-rafferty.com

-  FINANCIAL TABLES FOLLOW - 

THT Heat Transfer Technology, Inc.
Consolidated Balance Sheets
As of September 30, 2013 and December 31, 2012
(Stated in US Dollars thousands)
                              September 30,2013 December 31,2012

                              (Unaudited)       (Audited)
Assets
Current assets
Cash and cash equivalents     1,755             10,703
Restricted cash               2,035             1,838
Accounts receivable, net      36,103            37,683
Inventories, net              43,212            31,892
Other current assets          18,906            14,049
Total current assets          102,011           96,165
Long-term accounts receivable 1,149             1,237
Other non-current assets      13,878            14,067
Total assets                  117,038           111,469
Liabilities
Current liabilities
Short-term bank loans         15,951            18,705
Other current liabilities     39,743            33,080
Total current liabilities     55,694            51,785
Long-term loan                -                 951
Total liabilities             55,694            52,736
Total shareholders' equity    61,344            59,311
Noncontrolling interests      -                 (578)
Total liabilities and equity  117,038           111,469

 

THT Heat Transfer Technology, Inc.
Unaudited Consolidated Statements of Income
(Stated in thousands of US Dollars, except number of shares and per share
data)
                                              Three months ended September 30,
                                              2013             2012
Sales revenue                                 13,761           12,508
Cost of sales                                 (9,494)          (7,326)
Gross profit                                  4,267            5,182
Operating expenses
    Administrative expenses                   1,348            2,383
    Research and development expenses         557              315
    Selling expenses                          1,566            1,637
Total operating expenses                      3,471            4,335
Operating income                              796              847
Interest income                               4                7
Other income                                  268              283
Finance costs                                 (277)            (475)
Other expense                                 -                -
Income before income taxes                    791              662
Income taxes                                  (94)             (124)
Net income before noncontrolling interests    697              538
Net (loss) income attributable to             -                (34)
noncontrolling interest
Net income attributable to the equity         697              504
stockholders
Earnings per share attributable to THT Heat
Transfer
    Technology, Inc. common stockholders      $0.03            $0.02
Weighted average number of shares outstanding
- Basic and diluted                           20,453,500       20,453,500

                                                                                    

THT Heat Transfer Technology, Inc.
Unaudited Consolidated Statements of Cash Flows
For the nine months ended September 30, 2013 and 2012
(Stated in US Dollars thousands)
                                               Nine months ended September 30,
                                               2013             2012
Net cash used in operating activities               (4,530)         (4,338)
Net cash provided by (used in) investing            (262)           (1,121)
activities
Net cash provided by (used in) financing            (4,342)         5,311
activities
Effect of exchange rate changes on cash and         186             42
cash equivalents
Net decrease in cash and cash equivalents           (8,948)         (106)
Cash and cash equivalents at beginning of the       10,703          7,340
period
Cash and cash equivalents at end of the period      1,755           7,234

 

SOURCE THT Heat Transfer Technology, Inc.

Website: http://www.tht.cn
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